A well calculated step to address ‘mission drift’:

While ‘scaling-up’ has high potential to supply microfinance services to a greater number of clientele and to achieve institutional sustainability, there is a concern that scaling-up may lead to a drift from the microfinance institution’s original mission. In the other words, scaling-up may lead to a tendency to provide less attention to the poorer clients (mostly the ideal clientele of microfinance).

Recently, I had the opportunity to visit ‘Hand in Hand,’ (HiH) a well known NGO-MFI in Tamil Nadu, which also is promoting itself as an NBFC. Currently HiH is in the process of scaling outward to expand services to new clientele. During my visit to HiH, I learned that in the course of expanding operation into new areas the organization uses a well defined process to identify potential clientele. The process adopted is called a “participatory identification of target household (PITH)” which is a high value orientation exercise to select future clientele.

The PITH is conducted in three different phases at a village/hamlet level. Phase one is a transect walk, the second phase is social mapping and last one is introduction of poverty score card at house holds (HHs) level to identify the poorer households currently not served by other microfinance programme.

Transect walk:

The core objective of this phase is to build rapport among villagers, gather some basic information about the village etc. In process, a team of two Credit Officers walks around the village (they choose the village and panchayat based on secondary data, collected from government and non-governmental sources). They introduce themselves to villagers, share their purpose of visit, interact with key village representatives, talk about their programme. During this walk they also encourage villagers to participate in subsequent exercises such as the Participatory Rural Appraisal (PRA). On an average, each team spent around two to two and half hours in a village. There are no such scientific methods follow during transect walk but on a general level the team should collect information on the existing SHGs, NGOs, Govt. schemes and also, get a sense of potential household and demand for HiH microfinance.

Social Mapping Exercise (PRA)

The core objective of this phase is to assess the socio-economic status of village and understand potential clientele. A community participatory approach is adopted by HiH team in this exercise. In the course of the PRA exercise the team facilitates villagers to draw a social map of their village. The social map provides various crucial information of village such as the location of HHs, status of HH buildings (Kuccha/Semi-pucca/Pucca) and locations of drinking water facility, common water tank, temple, community centre, school, Agri-land (irrigated or dry) etc. All HHs are numbered and existing SHG members’ houses are identified and marked in the map. Apart from this information, the team also collects information like family member no, head – husband and wife name, names of children, school going child, telephone number, major income sources etc. about every HHs by using a separate chit papers for each HH. In addition, they notedsome of the aggregated information of village like total number of HH, population (men and female), number of potential HHs for HiH microfinance programme etc.

Introduction of poverty score card:

The final exercise is the introduction of poverty score card (PSC), which is the last screening process to identifying potential clientele (poor is the main criteria) for HiH microfinance programme. The PSC consist of well defined indicators to rate the poverty level of HH. This exercise is targeted at HHs identified during the first two phase exercises (specifically those left out from existing microfinance programmes or government programme). HiH keeps distance from the existing microfinance programme clients to avoid the duplication with other MF programmes.

After all three steps HiH launches its microfinance programme with the poor HHs those selected through the poverty score card.

Hand in Hand sets a good precedent in selecting clientele for its microfinance programme and demonstrates that expansion can be done without mission drift. The exercise demands a huge amount of effort in terms of human resources, time and money, which poses a question on its scalability for other MFIs. Indeed the cost effectiveness may not inspire other MFIs to adopt such methodology however the government and SHG promoting institutions like NABARD could come out with certain packages to support such a high value process. The other concern is usability of the huge amounts of information that is gathered during the exercises too. The implementer has to come out with a straightforward strategy on usability of such first-hand information that is collected during pre-SHG formation stages.